Congress underutilized, crypto in ruins

Current market assumptions of a Republican sweep of the U.S. Congress in Tuesday’s midterm elections appear invalid so far based on early results, leaving investors to ponder the implication for the 2024 White House race in addition to the stalemate. expected political.

Incumbent Democrats performed better than expected, with a chance to hold the Senate, limit expected House losses and win important gubernatorial races. After losing a key seat in Pennsylvania, Republicans must now win two of three Senate races in Georgia, Arizona and Nevada to take control of the chamber.

After a volatile session on Wall St on Tuesday, marked in part by the latest breakout in the cryptocurrency universe, US futures were in the red heading into Wednesday’s open. Dollar and treasury yields strengthened.

The possibility of a legislative stalemate for the next two years had already been priced in — undermining the dollar but supporting stocks and bonds on the principle that no big new tax spending would reduce pressure on inflation and the Federal Reserve. But the strength of the Democratic vote now could prompt a rematch of the 2024 presidential race, especially as former President Donald Trump is expected to announce his intention to run again next week.

Regardless of the survey results, trouble in the cryptocurrency world has escalated amid fears of widespread contagion and a sell-off as a major stock exchange came close to collapsing on Tuesday.

Cryptocurrencies fell again on Wednesday, a day after major exchange FTX landed under a path of withdrawals, forcing rival Binance to bail it out.

Major cryptocurrency bitcoin, which has lost nearly 75% of its value in the past 12 months, fell 20% this week, hitting its lowest level in nearly two years on Tuesday before stabilizing slightly over $17,000. But after a brief overnight rebound, it fell again by 7% on Wednesday.

Perhaps partly related to the cryptocurrency crisis, Tesla shares fell 5% on Tuesday after filings showed owner Elon Musk sold about $4 billion worth of Tesla stock ahead of its takeover by Twitter.

Walt Disney shares fell 9% after the bell on Tuesday after the entertainment giant missed its profit forecast and took further losses from its push into streaming video.

As global markets eagerly await US inflation figures for October on Thursday, China reported that factory-gate prices fell last month for the first time since December 2020, underscoring weakening inflation. Domestic demand as tightened COVID restrictions and a housing slump hit the economy.

Millions of people in the southern manufacturing hub of Guangzhou will have to undergo tests for COVID-19 on Wednesday in a bid to contain the city’s worst outbreak. But while China’s broader stock indexes were in the red on Wednesday, shares of Chinese property developers recovered as regulators expanded a program to support bond issuance in the troubled sector.

The yen was steady after Japan said its current account surplus fell in the first half of fiscal 2022 to an eight-year low, largely due to a rise in dollar-priced imported staples.

Key developments that could drive US markets later in the day on Wednesday:

* Remaining results from the US congressional midterm elections.

* Speech by Richmond Federal Reserve Chairman Thomas Barkin

* US Treasury auctions 10-year notes.

* Results from US companies: DR Horton, Wynn Resports, Roblox

* Finance Ministers meet at the COP27 climate conference in Egypt

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